By Paul J. Lim
August 22, 2018

The stock market just hit an incredible milestone. Or did it?

On Wednesday, Aug. 22, the bull market that sprang to life on March 9, 2009—in the aftermath of the global financial panic—turns 3,453 days old. At this point it’s the longest rally ever, surpassing the stock market’s epic run from Oct. 11, 1990, to March 24, 2000.

But there’s a huge if built into that assumption. The milestone really counts “only if we hit a new all-time high,” noted Sam Stovall, chief investment strategist at CFRA in a recent note.

You see, on Jan. 26, the S&P 500 rose to a record level of 2,872.87. By this spring it had dropped about 10%, before beginning a long, slow march back toward the previous record. On Tuesday, it closed at 2,862.96 — still a hair below its former peak.

In other words, it’s still possible that this bull market could have died at the beginning of this year. We just may not realize it yet.

Call it a foible of Wall Street. Sometimes you don’t know what type of market you’re in until you look at it in retrospect. “You have to put the celebration on hold until we find out later if the bull is in fact still alive,” says James Stack, president of InvesTech Research. “If we go down 20% from that January high, then January was the end of the bull.”

Something similar occurred after the bursting of the dotcom bubble on March 24, 2000. When stocks began to fall after hitting what was then a record high, investors initially thought it was a momentary lull in the rally. Some called it a buying opportunity. Investors didn’t realize that the bull had actually died until nearly a year later, on March 12, 2001, when the S&P 500 lost more than 20% of its value from that March 2000 peak.

Do market watchers think we’re in the same boat? Most don’t. “I totally believe that this bull market is still intact,” says Henry Smith, co–chief investment officer for the Haverford Trust Co. Of course, history says we may have to reserve judgment for at least a few more months.

Instead of the oldest rally, could this really be a baby bull?

To recap: This bull market is either about to turn 9½ years old, or it died several months ago. Actually, there’s a third option.

There are those who believe that the bull market may actually be a lot younger than people give it credit for. And because of its relative youth, the bull may have many more years to roam.

It all comes down to how you define bull and bear markets. The most commonly accepted marker of a bull and a bear is a 20% rise or fall in the broad market. And since the S&P 500 hasn’t fallen by more than 20% since this rally began in early 2009, conventional wisdom says the bull is alive and well.

But does it have to be the S&P 500? Between June 23, 2015, and Feb. 11, 2016, shares of small U.S. companies fell more than 26%. And between May 21, 2015, and Feb. 11, 2016, the broad U.S. market lost more than a quarter of its value, if you measure it with the Value Line Geometric Index.

This helps explain why Ned Davis Research, a respected market research firm, believes a bear market actually occurred in late 2015. And in turn, Ned Davis believes the current bull was born in February 2016, making this rally less than 2½ years old.

Meanwhile, there are others who believe this bull actually sprang to life in 2011, after a bear that spanned from May to October 2011. Purists disagree, since the S&P 500 fell only 19.9% during that stretch, just shy of the official 20% marker. However, that’s based on the S&P 500’s closing values, not its peaks and troughs throughout the middle of each trading day. If you look at midday prices, the market actually fell around 22% in 2011.

Stack isn’t convinced. “To be truly objective, you have to draw a line someplace,” he says. Stack believes that to be consistent, you have to measure these markets using day-end prices.

You won’t believe what the best-performing stocks are

If you read the headlines, you’d assume that the best-performing stocks in this record bull have been tech. And not just any tech shares—the so-called FAANG stocks, which stands for Facebook, Amazon, Apple, Netflix, and Google-parent Alphabet.

Yes, those stocks have been on a tear. But only one of the FAANG stocks is among the top 20– performing stocks since this bull started on March 9, 2009, according to Morningstar.

At the top of the list: Patrick Industries (PATK), a small company that manufactures furniture, shelving, and paneling used in homes and recreational vehicles. It’s certainly not as sexy as artificial intelligence or streaming media, but the stock is up a staggering 39,800% so far in this bull market.

Many of the other top-performing stocks in this bull are just as boring: MGP Ingredients (MGPI)—a distiller that also supplies ingredients used by other companies to make distilled spirits—has seen its stock rise 17,500%. Sleep Number Corp. (SNBR) sells specialized, adjustable beds to consumers; you’ve probably seen the company’s infomercials. The stock is up 14,800% since March 2009, which is around double the gains for Netflix.

Then there’s the rental car company Avis Budget Group (CAR). In the age of Uber and Lyft, you’d think Avis would be left behind. But the rental-car giant is riding the coattails of autonomous vehicles by partnering with Alphabet to support the tech giant’s fleet of driverless cars. The stock is up 10,500% in this bull.

History is repeating itself, so don’t make the same mistakes

The phrase “This time, it’s different” was the undoing of millions of investors who got suckered into making big bets on speculative Internet stocks in the late 1990s, only to see the dotcom bubble burst in 2000. Yet if you listen to most market watchers now, they’ll tell you that this bull market is nothing like the record-breaking “90s bull.

Are you sure about that? Like that bull, this one emerged after a major financial crisis—the savings-and-loan crisis in the late 1980s and the global financial panic in 2007–08. And like that bull, this one was led by tech. In the late “90s, investors were fixated on just four stocks—the four horsemen of tech: Microsoft, Intel, Cisco Systems, and Dell. Today, Wall Street’s focus is on just five names—the FAANGs.

Throughout the “90s bull, investors overlooked the fact that stock market valuations were at record highs because they thought faster-than-historic economic growth justified high price/earnings ratios for stocks. Today, the P/E for the S&P 500, based on 10 years of averaged profits, is back to historically high levels—32.1, or double the historical average.

Don’t make the same mistake. The bear market of 2000 didn’t just end the historic “90s bull; it marked a turning point in the type of stocks that the markets favored. Out were highflying, expensive “growth” stocks in rapidly expanding industries. In were underappreciated or beaten down “value” stocks, the bargain-priced shares of boring companies that often get overlooked. Well, fast-forward to today: “After the longest run of outperformance of growth stocks ever, we think value may be poised for a comeback,” notes John Lynch, chief investment strategist for LPL Financial. On our MONEY 50 list of recommended ETFs, you can find such stocks in Vanguard Value ETF (VTV) or Invesco FTSE RAFI U.S. 1000 ETF (PRF).

Hold Stocks for the Long Run

Even as stock prices have returned to near record highs, faith in equities hasn’t. Between 2001 and 2008, 62% of U.S. adults owned stocks directly or through a fund or in their retirement accounts, according to Gallup. But today, only 54% of adults do so.

After a “lost decade” in which stock values went pretty much nowhere from 2000 to 2012, it’s not surprising that investors are wary. But with interest rates and inflation on the rise, it’s risky to be making big bets on bonds.

Okay, but isn’t a bear market in stocks a risk? Sure. But recent history has shown that if you’re willing to hold stocks for the long run—we mean decades—you’ll overcome short-term drops. Thanks to this bull, for instance, stocks have gained 9.2% annually for the past 15 years—erasing the effects of that lost decade.

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